Japanese yen climbed to three-day highs against the US dollar on Wednesday, following the disappointing trade balance report from China, which boosted safe haven demand for the Japanese currency.
USD/JPY fell down to a session low at 100.05 at 8:07 GMT, the lowest point since July 5th. Support was expected at July 5th low, 99.88, while resistance was likely to be encountered at July 9th high, 101.29.
An official report said earlier, that Chinese export declined by 3.1% in June on annual basis, confounding experts’ projections of a 3.7% increase, and bolstering concerns over diminishing demand for raw materials globally. In May the export figure rose by 1%. Chinese annual import figure decreased by 0.7% in June, implying a slow down in domestic demand as well. Experts had projected an 8% rise of Chinese import.
Additionally, Consumer Confidence in Japan continued to stand on levels below 50.0, as the index dropped to 44.3 in June from 45.7 a month ago, implying that pessimistic estimates, regarding the development of Japanese economy, were still predominant. On the other hand, Tertiary Industry Activity Index in Japan showed some positivism, increasing by 1.2% in May on a monthly basis, above preliminary estimates of a 0.8% rise, while revised data in April showed a 0.5% drop.
Still, demand for the US dollar continued to be supported due to ongoing expectations of US Federal Reserve Bank reducing scale of its Quantitative Easing later in the year.
Japanese yen advanced against the euro as well, with EUR/JPY pair declining by 0.88% to 128.15 at 8:14 GMT. Ultimately, GBP/JPY pair also plunged by 0.85% to 149.14 at 8:18 GMT.
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